MORNING LINE: HEALTH CARE COULD BE CAMPAIGN NIGHTMARE FOR DEMOCRATS

It is entirely possible that the health care bill - aside from its effects on ordinary citizens - could do serious damage to Obama and the Democratic Party. Two examples follow - one raised by Republicans, the other by a liberal. The measure has become so complex that no one is sure of what its health, economic or political effectS will be. But if you were managing a campaign in 20010 or 2012, would you want to defend the criminal penalty provisions of the Pelosi measure? Or the fact that major positive aspects of the measure won't even go into effect until 2013?

The Democrats seem to be operating on the assumption that if they get any bill, this will work in their favor. But indications are increasingly pointing the other way.

Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) has released a letter from the non-partisan Joint Committee on Taxation confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill could land people in jail. The JCT letter says that Americans who do not maintain "acceptable health insurance coverage" and who choose not to pay the bill's new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.

Excerpts from the JCT letter:

"H.R. 3962 provides that an individual (or a husband and wife in the case of a joint return) who does not, at any time during the taxable year, maintain acceptable health insurance coverage for himself or herself and each of his or her qualifying children is subject to an additional tax." [page 1]

"If the government determines that the taxpayer's unpaid tax liability results from willful behavior, the following penalties could apply…" [page 2]

"Criminal penalties: Prosecution is authorized under the Code for a variety of offenses. Depending on the level of the noncompliance, the following penalties could apply to an individual:

Section 7203 - misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.

Section 7201 - felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years." [page 3]

Says Camp, "When confronted with this same issue during its consideration of a similar individual mandate tax, the Senate Finance Committee worked on a bipartisan basis to include language in its bill that shielded Americans from civil and criminal penalties. The Pelosi bill, however, contains no similar language."

Harry Moroz, DMI Blog - The legislation's effect on premiums for upper middle-income households with employer-sponsored coverage is uncertain. Cuts to Medicare will require serious backbone from a week-kneed Congress. . . And the public option's capacity to create competition among insurers is limited by its small size: the Congressional Budget Office estimates that only 6 million individuals will enroll.

However, one of the bill's most significant defects is its delayed implementation. In 2010, very limited reforms, such as a ban on rescissions and improvements to cost-sharing in Medicare and Medicaid, come into effect. 2011 and 2012 are essentially down years. It is not until 2013 that the most important and substantive provisions become effective: a complete ban on denials of health care for preexisting conditions, a ban on pricing according to health status, the opening of the Health Insurance Exchange with affordability credits. . .

Politico has reported that Democratic Representatives and Senators are pressuring their party leadership for real results from reform that they can point out to constituents in the 2010 midterm elections.

But the economic consequences of the delays have not been addressed.

In many ways, the situation is similar to the circumstances surrounding the Credit Card Accountability, Responsibility, and Disclosure Act, which banned abusive and unfair credit card practices. Congress delayed implementation of these protections until next year, allowing card companies to raise interest rates and fees in the interim. Just this week, the House passed an emergency measure designed to speed up implementation of the provisions, arguing that the card companies' rate and fee hikes were harming consumers at a time of great economic stress.

The House should apply this lesson to health care. Delaying implementation only allows the relentlessly increasing unemployment rate to push up the relentlessly increasing rate of the uninsured. An immediate expansion of health care, particularly of Medicaid eligibility, would help break this causal chain.

Indeed, a recent Kaiser report on health coverage in the early months of the recession finds that the number of uninsured adults increased between 2007 and 2008 by 1.5 million people primarily because public coverage was unable to offset the decline in employer-sponsored insurance. Those who lost coverage were primarily low-income (and, for reasons also related to income, white), but not eligible for public programs. . .